The budget bill conferees agreed Wednesday afternoon to include a reciprocity agreement on students and income taxes with Minnesota in the 1973-75 state budget bill. The vote on including the language of the agreement reached between Governor Lucey and Minnesota Governor Wendell Anderson was unanimous.

The agreement provides the state of Wisconsin and Minnesota will each tax only their own residents’ income from the other state and at the end of the year, the states will determine how much each collected, then the state with the larger collection will provide a payment to the other side so the total income will be equal. Minnesota officials estimate their state will gain about $2 million a year, Sen. Robert Knowles (R-New Buffalo) told the conferees.

And Today …

The income tax reciprocity agreement was canceled by Minnesota in 2009, over the speed at which payments were made to MN, according to a Twin Cities Pioneer Press story. WI DOR Sec. Ervin said in a statement, “It is unfortunate that Minnesota is terminating the income tax reciprocity agreement that our states share. The Wisconsin Department of Revenue has worked cooperatively with the Minnesota Department of Revenue on this agreement since 1967 and this outcome is disappointing.” According to a La Crosse Tribune story, then MN Revenue Commissioner Einess said, “We just weren’t able to reach an agreement. We just couldn’t quite bridge the gap.”

The status of the income tax reciprocity agreement between Minnesota and Wisconsin is still unresolved. Negotiations are stalled over money Minnesota says Wisconsin would need to pay to make up for revenue loss. Earlier this year, DOR Sec. Chandler said in a Wisconsin Public Radio story, “Minnesota has said, if reciprocity goes back into place, the Minnesota treasury would get about $6 million less per year.” In the same story MN DOR spokesman Louis said in a statement, “Any reciprocity agreement with Wisconsin would need to both simplify taxes for filers in both states and not leave a hole in Minnesota’s budget each year.”

Sen. Harsdorf said, “I am encouraged by recent action by the Minnesota Legislature in recognizing the importance of reinstating the tax reciprocity agreement between our two states. I have urged Wisconsin Department of Revenue Secretary Rick Chandler to work with the Minnesota Revenue Commissioner to negotiate an agreement and given our discussions, I know he is working hard to make that happen.”